By Katie Micik Dehlinger
USDA's broad measure of profits -- net farm income -- is forecast to drop 25.5% from 2023. That's nearly 41% lower than 2022's record when adjusted for inflation.
USDA forecast net farm income to be $116.1 billion. That's 1.7% lower than the 20-year average.
Net cash farm income is expected to fall significantly below the long-run average. Net cash income measures cash farm-related income from the year minus cash expenses and excludes changes in inventory, depreciation and rental income from dwellings.
USDA expects net cash farm income to decline by 24.1% from 2023 to $121.7 billion in 2024. That's 13.7% lower than the 2003-2022 average and 43.2% below 2022. Lower cash receipts, lower direct government payments and higher production expenses all play a role in declining farm incomes.
"USDA's lower net farm income estimates for 2023 and 2024 reflect the transition of going from corn prices above $6.00 and soybean prices near $15 in early 2023 to less than $4.50 for corn and less than $12 for soybeans today," DTN Lead Analyst Todd Hultman said.
Increased supplies of crops will help the livestock industry and keep both feed and food costs down.
"But the painful part of this transition is that for many corn growers, cash prices in the low or even mid-$4s will not be profitable in 2024, and the protective levels of crop insurance will likely be too low to help," he said.
For soybean growers, current cash prices near $11.50 are roughly 80 cents a bushel below USDA's average production cost estimate.
"Weather is always a risk, but in early 2024, corn and soybean crops in both Argentina and Brazil are looking big enough to offer significant competition for exports for the rest of 2024, adding to concerns about farm profitability 2024," Hultman said.
Sen. John Boozman, R-Ark., ranking member of the Senate Agriculture Committee, pointed to the decline in farm income Wednesday as a reason to increase the commodity safety net. The farm bill remains stalled in committee and Sen. Debbie Stabenow, D-Mich., earlier this week floated the idea of offering farmers the chance for an insurance program with a higher premium subsidy instead of higher reference prices.
Boozman said the lower farm income forecast underscores the need to make meaningful investments in the farm bill's safety net programs.
"We are witnessing the most rapid and steepest erosion in the farm economy of all time," he said. "This dramatic projected decline reflects what I've heard around the country from farmers and ranchers and is why I have repeatedly said that risk management tools must be enhanced in the next farm bill. Our current farm safety net is not equipped to handle the challenges our farmers are facing. The gravity of the situation drives home the need for Congress to make meaningful investments in the farm bill's safety net programs. We must act now to give producers the risk management tools they need to succeed in the coming years. The farm bill is our opportunity to do that."
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